Finding new lease on life

Older apartment complexes get modern makeover

From 1996 to 2009, Robert Lyles' and Patricia Watts' development company was responsible for building more than 3,000 condominium units, many of them upscale, throughout the Valley's coveted zip codes.

But when the recession hit, taking the real-estate market down with it, Lyles and Watts were forced to rethink their game plan.

This new strategy resulted in Deco Communities, which specializes in giving older, nondescript apartment complexes a makeover that makes them attractive to a new generation of renters.

Since launching Scottsdale-based Deco in 2010, Lyles, Watts and business partner Dan Richards have rehabbed two shabby complexes yielding 330 renovated apartments designed to catch the eye of young professionals, recent college grads or anyone seeking apartment living without the predictable apartment design.

Prior to starting their large condo development firm Starpointe in 1996, Lyles and Watts had extensive experience in nearly every facet of real estate and development. Deco allowed them to utilize their combined 70-plus years of experience and also find a way to navigate the recession's impact.

"As the housing market crashed, we decided to go back to our roots. The big focus had been the luxury (home) business. We decided there was a good niche to go into ... that lower (priced) market," Lyles said

Deco's two current properties are under the company's Cabana label. The first was a foreclosed complex in Phoenix built in 1979.

The second was a short-sale complex in Tempe that was built in 1972.

Complexes include studio and one- and two-bedroom units. Rent starts at $625 at Cabana on 24th in Phoenix, and $519 at Cabana on McClintock in Tempe.

The quality of the buildings themselves plays a key role in which properties Deco chooses to acquire, Watts said. Older properties that have solid foundations with big open spaces and mature landscaping are among the desired criteria that many structures built in the 1960s and 1970s come with.

"You get a lot of love in this type of architecture. Big open courtyards ... people don't do that anymore. We love that benefit," Watts said.

Research into what renters want, specifically Generation Y-ers, influence design and amenities decisions. Bold color schemes, fitness centers, attractive common areas and secure laundry rooms with systems that send users a text message when their clothes are done are among the features.

Authenticity and connectivity rank high on their wish lists, Watts said. Both Cabana properties are located in urban environments that are close to retail and public transportation, and are pedestrian friendly.

"It's more important that they are close to where they work and can do fun things. They want to be able to walk or bike there," Watts said.

The dour economy and housing crash has produced a crop of renters that defy the traditional profile of this demographic. Cabana's target includes young adults who are just out of college or singles in their 20s to low 30s, who have steady jobs and have outgrown roommates but still want to feel part of a community, Lyles said.

"The American dream and desire to own a house isn't that strong because they've seen their parents lose their home," he said. "There are more renters by choice in every demographic and economic level."

Deco plans to add to their property list and looks to expand into states like Nevada and Florida. The firm eyes structures that would be otherwise torn down with parts destined for the landfill. Salvageable materials like doors and cabinets are recycled and energy-efficient upgrades are made.

Tempe Mayor Hugh Hallman likes that Deco is making the most of well-built structures instead of tearing down what's old to make way for new construction. He called their concept, and others like it, "brilliant."

"We have great infrastructure in the Valley. I view it as a shame when one sees the wrecking ball come down on a building built to last a century, torn down at age 30."

Hallman said developers like Deco are crucial to cities' success.

"That kind of redevelopment role, to take an eyesore and turn it into a very modern, hip and safe place to live increases the value of the entire community," he said.

In Deco's early days, its business model raised eyebrows among a few colleagues. They questioned whether the extra hard work and uncertain return on investment would be worth it. So far, Lyles, Watts and Richards think it has.

Interesting stats: 88 percent of Generation Y-ers want to live in urban areas and 2/3 of them say that living in a walkable community is important, according to a 2012 study by economic development practice group RCLCO.